Transaction bank profiles: Abu Dhabi Commercial Bank

By: Duncan Kerr Published on: Monday, September 29, 2014

Since 2009 ADCB has invested heavily in developing and growing its transaction banking business. It is gaining market share and recognition in the Middle East and beyond, as Euromoney’s results confirm.

In the aftermath of the 2008 financial crisis, ADCB needed
to implement a change in strategy. The crisis had hit the bank
hard so rebalancing its banking business was crucial, and
transaction banking was seen as an important element in being
able to achieve long-term sustainable growth.

In 2009, and as part of that change, the bank consolidated
its previously separate cash management and trade businesses
under a new transaction banking group and appointed Murali
Subramanian, formerly Citi’s head of global
transaction services, Middle East and north Africa, to oversee
it.

The business today accounts for 44% of ADCB’s
wholesale banking revenues and 19% of group revenues. It is
also winning it recognition among its corporate and financial
institution clients too.

ADCB broke into the top 20 best global cash managers for
non-financial corporates for the first time in 2012, dropped
out in 2013, but this year has returned and has improved its
ranking among financial institutions too. Moving up to 19 from
23 and 17 from 18 in 2014, respectively, is still some way from
the top tier, but it’s a very credible achievement
for a UAE-based bank.

And while ADCB’s ranking is highest in its main
regional markets – it maintained its third place
ranking this year among non-financial corporates in the Middle
East region, and remains the number one cash manager in the UAE
– the results show it is gaining international
recognition.

Strategic importance

For Subramanian, the strategic importance of the transaction
banking business to ADCB is in attracting new corporate clients
at the same time as deepening and retaining existing key client
relationships.

"While many strategic client relationships are founded on
balance-sheet commitment, a transaction banking cross sale
provides the client with a whole new perspective on enhancing
their operating efficiency rather than just financing it
effectively," he says.

The consequent
reputation risk of a
sudden platform or service failure far exceeds the
investment required to assure reliability

Murali Subramanian

"The transaction banking business also acts as a trusted
adviser to clients on improving their IT/enterprise resource
planning and security architecture, allowing them to justify
the investment required to upgrade their operating platforms.
This frees the CFO and treasurer to focus on their main
responsibilities of managing liquidity and risks rather than
having to focus on managing their banking operations."

Subramanian says some of the main strengths of
ADCB’s transaction banking business include seeing
its "mission from the eyes of corporate treasury rather than be
product or solution led" and its size, which allows for swifter
"execution of initiatives rather than having to navigate
complex multi-level bureaucracies" and higher emphasis on more
tailored solutions.

Being able to maintain those strengths requires continued
investment. "We anticipate IT to be an area that will require
and attract more investment as client operations depend on our
service reliability," he says.

"The consequent reputation risk of a sudden platform or
service failure far exceeds the investment required to assure
reliability."

ADCB is also investing in its mobile platform across all its
transaction banking products, as well as developing electronic
capabilities for corporate treasurers such as forecasting, self
service for investments, electronic account management (eBAM),
and better quality account reconciliation.

Subramanian says ADCB banks everything from large, small and
medium-sized corporate, financial institution and public sector
clients in the UAE and GCC region, to select multinationals out
of Europe. And across each segment, Subramanian says ADCB sees
growth potential.

Economic powerhouse

"As the UAE grows steadily into an economic powerhouse for
the region, we are seeing increasing willingness from
multinational corporations to work with us, and an increasing
willingness from government clients to move their
efficiency-seeking operating businesses over to us from other
Abu Dhabi banks. We are also making deeper inroads into the SME
and mid-market segment," he says.

Growth will predominantly come from business in the UAE and
the Middle East region, but there is also promising scope for
more international business where ADCB, working in strategic
partnership with other banks, can service clients in other
markets as well as partner-banks’ clients in the
UAE.

"Our existing strategic relationships with Bank of America
Merrill Lynch and Banco Santander have added a lot of value to
clients of both institutions and to ADCB," says
Subramanian.

He adds that over the next couple of years the transaction
banking business has three main strategic goals: to continue to
innovate and evolve best practices for transaction banking in
the region; to continue to expand the cash management and trade
products suite ADCB offers its clients; and, to be the dominant
supply chain finance and service provider in the Middle
East.

Further reading on Euromoney

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